When it comes to running a successful business, there will always be bumps in the road along the way. An employee might cause damage to a customer’s property, a natural disaster could cause damage to your commercial premises, or a client could file a lawsuit claiming compensation for poor quality workmanship. That’s why entrepreneurs need to embrace the importance of insurance and recognize it as a valuable investment for the future, in order to be confident that personal and business assets will be safeguarded.
The critical issue is that many growing businesses fail to acknowledge the value of insurance until it is too late. Many small firms wrongly assume that by creating a Limited Liability Company (LLC) they are afforded necessary legal protection in the event of a claim by a customer or employee. Although an LLC structure does provide full protection in terms of personal liability for business-based decisions, its protection for liability is somewhat lacking.
The U.S. Small Business Administration (SBA) uses the example of an LLC that inadvertently breaks intellectual property laws or is sued by a staff member. These lawsuits and potential losses are not protected as an LLC. That’s why general liability insurance is not only a sensible investment but an essential investment in safeguarding you, your business and your employees. These policies provide legal cover for any damages incurred as a consequence of anything from property damage and libel through to slander, healthcare expenses and the total cost of defending a lawsuit.
Growing businesses can also look to arrange various add-ons to tailor a bespoke insurance policy that meets their needs. If your business has very little startup capital and relies heavily on client income, you may be able to arrange for accounts receivable protection to guard against customers that refuse to pay your invoices on time – or at all.
While businesses that engage with members of the general public on a daily basis may seem the most important kind of businesses to insure, it’s important not to forget about freelancers and self-employed professionals too. Although insurance might not seem like a necessity for a one-man-band from the outset, as your business expands and takes on additional risk, professional liability insurance becomes an absolute must investment. It gives peace of mind that, in the event a customer or client loses out financially as a result of your firm’s work, your insurance policy protects you from expensive lawsuits.
The average small business lawsuit in the U.S. costs $54,000, while the average employee contractual dispute costs $91,000. If your business’ insurance premium was $100 per month, that would amount to 54 years of premiums just to cover a single lawsuit. By investing those extra dollars in a comprehensive, bespoke insurance policy, your business will be able to engage with customers and carry out its very best work without fear of legal recriminations – something you cannot put a price on.
It’s not just your employees and customers that you should insure against either. Property insurance is also a legitimate investment in safeguarding the long-term future of your commercial space. It provides peace of mind to busy entrepreneurs that their assets are protected in the event of criminal losses or natural disasters.
In short, those who view business insurance as a millstone around their neck should certainly think again. Avoiding insurance premiums just to save a few bucks every month really is a false economy.
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